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That's Coase's Theorem in action: any inconvenience can be compensated, so it's fine to mandate the globally economically optimal decision and use transfer paym
by gowld 6y ago
That's Coase's Theorem in action: any inconvenience can be compensated, so it's fine to mandate the globally economically optimal decision and use transfer payments to make them locally fair.
- wahern 6y agoSort of? AFAIU, according to the Coase theorem the courts should never have needed to be involved. Indeed, the rule prohibiting relief for those coming to the nuisance is designed to prevent people from using the courts as an end run around bargaining with the nuisance owner. The characterization of the judgment as achieving global optimality using transfer payments brings to mind Kaldor–Hicks. Here's an interesting paper that discusses the case's relationship to the Coase theorem: Coming to the Nuisance: An Economic Analysis from an Incomplete Contracts Perspective, https://www.dartmouth.edu/~csnyder/491.pdf https://www.dartmouth.edu/~csnyder/491.pdf